[10-Q] VERRA MOBILITY Corp Quarterly Earnings Report
Filing Explained
Effective August 1, the five-year customer extension has less favorable terms and fleet-volume rights, changing the company’s contracted revenue exposure.
As a Form 10-Q, this filing is an unaudited quarterly report; it records the quarter ended
The extension has terms materially less favorable to the company than the prior agreement and gives the customer fleet-volume modulation rights, while producing no revenue or other amounts in the reported quarter under the new agreement.
Second-quarter revenue was
The company recorded separate Parking Solutions impairments of
At
The company also repurchased and retired 2,215,800 Class A shares for
The stated follow-up is contractual renewal discussions with a third significant Commercial Services customer within the next twelve months; the filing says failure to renew favorably or future contract termination could affect revenue, results, and cash flows.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from ___________ to ___________.
Commission File Number:
(Exact name of registrant as specified in its charter)
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incorporation or organization) |
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Identification No.) |
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(Registrant’s Telephone Number, Including Area Code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
(Title of Each Class) |
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(Trading Symbol) |
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(Name of Each Exchange on Which Registered) |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act:
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Non-accelerated filer |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). YES ☐ NO
As of August 3, 2026, there were
VERRA MOBILITY CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2026
TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION |
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6 |
Item 1. Financial Statements |
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6 |
Condensed Consolidated Balance Sheets |
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Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income |
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Condensed Consolidated Statements of Stockholders’ Equity |
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Condensed Consolidated Statements of Cash Flows |
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Notes to the Condensed Consolidated Financial Statements |
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12 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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27 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
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40 |
Item 4. Controls and Procedures |
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PART II—OTHER INFORMATION |
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Item 1. Legal Proceedings |
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Item 1A. Risk Factors |
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41 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
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43 |
Item 3. Defaults Upon Senior Securities |
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43 |
Item 4. Mine Safety Disclosures |
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Item 5. Other Information |
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Item 6. Exhibits |
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SIGNATURES |
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46 |
3
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Report other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, products, services, technology offerings, market conditions, growth and trends, expansion plans and opportunities, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely” and similar expressions, and the negative of these expressions, are intended to identify forward-looking statements.
The future events and trends discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Factors that could cause actual results to differ include the risks and uncertainties described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025 (our “Annual Report”), Part II, Item 1A. “Risk Factors” of this Report, and in other filings with the Securities and Exchange Commission (the “SEC”) which highlight, among other risks:
4
You should not rely on forward-looking statements as predictions of future events. We operate in a very competitive and rapidly changing environment and new risks emerge from time to time. The forward-looking statements in this Report represent our views as of the date hereof. Except as may be required by law, we undertake no obligation to update any of these forward-looking statements for any reason or to conform these statements to actual results or revised expectations.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, are available free of charge on our website, verramobility.com, under the heading “Investors” immediately after they are filed with, or furnished to, the SEC. We use our investor relations website, ir.verramobility.com, as a means of disclosing information, which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media. Information contained on or accessible through, including any reports available on, our website is not a part of, and is not incorporated by reference into, this Report or any other report or document we file with the SEC. Any reference to our website in this Report is intended to be an inactive textual reference only.
Unless the context indicates otherwise, the terms “Verra Mobility,” the “Company,” “we,” “us,” and “our” as used in this Report refer to Verra Mobility Corporation, a Delaware corporation, and its subsidiaries taken as a whole.
5
Part I—Financial Information
Item 1. Financial Statements
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data) |
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June 30, |
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December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable (net of allowance for credit losses of $ |
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Unbilled receivables |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Installation and service parts, net |
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Property and equipment, net |
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Operating lease assets |
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Intangible assets, net |
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Goodwill |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Deferred revenue |
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Accrued liabilities |
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Tax receivable agreement liability, current portion |
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Current portion of debt |
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Total current liabilities |
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Debt, net of current portion |
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Operating lease liabilities, net of current portion |
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Tax receivable agreement liability, net of current portion |
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Asset retirement obligations |
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Deferred tax liabilities, net |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Note 13) |
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Stockholders' equity |
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Preferred stock, $ |
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Class A common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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( |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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See accompanying Notes to the Condensed Consolidated Financial Statements.
6
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS) INCOME
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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(In thousands, except per share data) |
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2026 |
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2025 |
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2026 |
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2025 |
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Service revenue |
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$ |
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$ |
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$ |
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$ |
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Product sales |
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Total revenue |
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Cost of service revenue, excluding depreciation and amortization |
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Cost of product sales |
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Operating expenses |
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Selling, general and administrative expenses |
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Depreciation, amortization and (gain) loss on disposal of assets, net |
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Goodwill impairment |
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Impairment of intangible assets |
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Total costs and expenses |
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(Loss) income from operations |
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Interest expense, net |
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Loss on extinguishment of debt |
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Other income, net |
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( |
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( |
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( |
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Total other expenses |
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(Loss) income before income taxes |
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( |
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( |
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Income tax provision |
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Net (loss) income |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Other comprehensive (loss) income: |
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Change in foreign currency translation adjustment |
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Total comprehensive (loss) income |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Net (loss) income per share: |
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Basic |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Diluted |
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$ |
( |
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$ |
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$ |
( |
) |
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$ |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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See accompanying Notes to the Condensed Consolidated Financial Statements.
7
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
For the Three and Six Months Ended June 30, 2026 |
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Common |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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(In thousands) |
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Shares |
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Amount |
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Capital |
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Deficit |
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Loss |
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Equity |
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Balance as of December 31, 2025 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Share repurchases and retirement |
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( |
) |
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— |
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( |
) |
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( |
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— |
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( |
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Vesting of restricted stock units ("RSUs") and performance share units ("PSUs") |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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Payment of employee tax withholding related to RSUs and PSUs vesting |
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— |
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— |
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( |
) |
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— |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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Balance as of March 31, 2026 |
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( |
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( |
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Net (loss) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Vesting of RSUs and PSUs |
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— |
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— |
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— |
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— |
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— |
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Payment of employee tax withholding related to RSUs and PSUs vesting |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Stock-based compensation |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net of tax |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance as of June 30, 2026 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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8
For the Three and Six Months Ended June 30, 2025 |
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Common |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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(In thousands) |
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Shares |
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Amount |
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Capital |
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Deficit |
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Loss |
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Equity |
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Balance as of December 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Share repurchases and retirement |
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( |
) |
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— |
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( |
) |
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— |
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( |
) |
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Vesting of RSUs and PSUs |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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Payment of employee tax withholding related to RSUs and PSUs vesting |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Stock-based compensation |
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— |
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— |
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— |
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— |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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Balance as of March 31, 2025 |
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( |
) |
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( |
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Net income |
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— |
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— |
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— |
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— |
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Vesting of RSUs and PSUs |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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Payment of employee tax withholding related to RSUs and PSUs vesting |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Stock-based compensation |
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— |
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— |
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— |
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— |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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Balance as of June 30, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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See accompanying Notes to the Condensed Consolidated Financial Statements.
9
VERRA MOBILITY CORPORATION
condensed consolidated Statements of Cash Flows
(Unaudited)
|
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Six Months Ended June 30, |
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($ in thousands) |
|
2026 |
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2025 |
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Cash Flows from Operating Activities: |
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Net (loss) income |
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$ |
( |
) |
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$ |
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of deferred financing costs and discounts |
|
|
|
|
|
|
||
Loss on extinguishment of debt |
|
|
|
|
|
|
||
Share-based proceeds from legal settlement |
|
|
( |
) |
|
|
|
|
Unrealized loss on remeasurement of share-based proceeds |
|
|
|
|
|
|
||
Credit loss expense |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
|
|
|
|
||
Uncertain tax position reserve release |
|
|
|
|
|
( |
) |
|
Goodwill impairment |
|
|
|
|
|
|
||
Impairment of intangible assets |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
Unbilled receivables |
|
|
( |
) |
|
|
( |
) |
Inventory |
|
|
( |
) |
|
|
|
|
Prepaid expenses and other assets |
|
|
|
|
|
|
||
Deferred revenue |
|
|
( |
) |
|
|
( |
) |
Accounts payable and other current liabilities |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
( |
) |
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash Flows from Investing Activities: |
|
|
|
|
|
|
||
Purchases of installation and service parts and property and equipment |
|
|
( |
) |
|
|
( |
) |
Cash proceeds from the sale of assets |
|
|
|
|
|
|
||
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash Flows from Financing Activities: |
|
|
|
|
|
|
||
Borrowings on Amended Revolver |
|
|
|
|
|
|
||
Repayment on Amended Revolver |
|
|
( |
) |
|
|
|
|
Repayment of term loan debt |
|
|
( |
) |
|
|
( |
) |
Equipment financing arrangements |
|
|
|
|
|
|
||
Repayment of equipment financing arrangements |
|
|
( |
) |
|
|
|
|
Payment of debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Share repurchases and retirement |
|
|
( |
) |
|
|
|
|
Proceeds from the exercise of stock options |
|
|
|
|
|
|
||
Payment of employee tax withholding related to RSUs and PSUs vesting |
|
|
( |
) |
|
|
( |
) |
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
|
|
|
|
||
Net (decrease) increase in cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
Cash, cash equivalents and restricted cash - beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash - end of period |
|
$ |
|
|
$ |
|
||
See accompanying Notes to the Condensed Consolidated Financial Statements.
10
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
|
|
Six Months Ended June 30, |
|
|||||
Reconciliation of cash, cash equivalents, and restricted cash |
|
2026 |
|
|
2025 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
Supplemental cash flow information: |
|
|
|
|
|
|
||
Interest paid |
|
$ |
|
|
$ |
|
||
Income taxes paid, net of refunds |
|
|
|
|
|
|
||
Supplemental non-cash information: |
|
|
|
|
|
|
||
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end |
|
|
|
|
|
|
||
Property and equipment acquired through vendor financing |
|
|
|
|
|
|
||
See accompanying Notes to the Condensed Consolidated Financial Statements.
11
VERRA MOBILITY CORPORATION
Notes to the CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Description of Business
Verra Mobility Corporation (collectively with its subsidiaries, the “Company” or “Verra Mobility”) offers integrated technology solutions and services to its customers who are located throughout the world, primarily within the United States, Australia, Europe, and Canada. Verra Mobility’s goal is to make transportation safer, smarter, and more connected through its integrated, data-driven solutions, including toll and violations management, title and registration services, automated safety and traffic enforcement, and commercial parking management. The Company brings together vehicles, hardware, software, data, and people to solve transportation challenges for customers around the world. The Company is organized into
The Commercial Services segment offers automated toll and violations management and title and registration solutions to rental car companies (“RACs”), direct commercial fleet owner-operators (“Direct Fleets”) and fleet management companies (“FMCs”), and other large fleet owners in North America. Through established relationships with individual tolling authorities throughout the United States, Commercial Services’ toll and violations management solutions facilitate timely payment of tolls and violations incurred by its customers’ vehicles, accurate transfer of liability on customers’ behalf, and billing of, and collections from, individual drivers. It also manages regional toll transponder installation and vehicle association—a critical and highly complex process for RAC, Direct Fleet, and FMC customers—to ensure that transponders and corresponding toll transactions are associated with the correct vehicle. In Europe, the Commercial Services segment provides violations processing through Euro Parking Collection plc and consumer tolling services through Pagatelia S.L.U.
The Government Solutions segment provides photo enforcement automated safety solutions to states, municipalities, counties, school districts, and law enforcement agencies of all sizes, primarily in the United States and Australia. The Company’s proprietary technologies are designed to provide government agencies with the information, data, and automated end-to-end administrative capabilities to enforce traffic violations through photo enforcement, with the goal of reducing traffic violations and resulting collisions, injuries, and fatalities. The Company installs, maintains, and manages hardware and software automated safety solutions to process event data, apply customer-specific rules, and connect traffic violations to responsible drivers or vehicle owners on behalf of customers. The Company also offers an end-to-end solution, in which it automatically sends captured events to a customer’s designated enforcement agency, and, once a violation is confirmed, the Company manages citation mailing, billing, and other administrative tasks on behalf of the customer. The international operations for this segment primarily involve the sale of traffic enforcement products and recurring maintenance services related to the equipment and software.
The Parking Solutions segment provides an integrated suite of parking software, transaction processing, and hardware solutions to its customers, which include universities, municipalities, healthcare facilities, and commercial parking operators. This segment develops specialized hardware and parking management software that provides a platform for the issuance of parking permits, enforcement, gateless vehicle counting, event parking, and citation services. It also produces and markets its proprietary software as a service to customers throughout the United States and Canada.
2. Significant Accounting Policies
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.
Use of Estimates
The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. There have been no material changes in the Company’s significant accounting policies from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2025.
12
Management believes that its estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.
Concentration of Credit Risk
Significant customers are those which represent more than
Revenue from a single Government Solutions customer exceeded
Significant customer revenues were generated through three of the Company’s Commercial Services customers, with each exceeding
There were
Allowance for Credit Losses
The Company reviews historical credit losses and customer payment trends on receivables and develops loss estimates as of the balance sheet date, which includes adjustments for current and future expectations. It identifies pools of receivables based on the type of business, industry in which the customer operates and historical credit loss patterns. The Company uses collection assumptions (typically at the customer level) to estimate expected credit losses. Receivables are written off against the allowance for credit losses when it is probable that amounts will not be collected based on the terms of the customer contracts, and subsequent recoveries reverse the previous write-off and apply to the receivable in the period recovered. No interest or late fees are charged on delinquent accounts. The Company periodically evaluates the adequacy of its allowance for expected credit losses and adjusts appropriately.
The following presents the activity in the allowance for credit losses by reportable segment for the six months ended June 30, 2026 and 2025, respectively:
|
|
Commercial |
|
|
Government |
|
|
Parking |
|
|
|
|
||||
($ in thousands) |
|
Services(1) |
|
|
Solutions |
|
|
Solutions |
|
|
Total |
|
||||
Balance at January 1, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Credit loss expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Write-offs, net of recoveries |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance at June 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Commercial |
|
|
Government |
|
|
Parking |
|
|
|
|
||||
($ in thousands) |
|
Services(1) |
|
|
Solutions |
|
|
Solutions |
|
|
Total |
|
||||
Balance at January 1, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Credit loss expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Write-offs, net of recoveries |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance at June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
13
Remaining Performance Obligations
Deferred revenue represents amounts that have been invoiced in advance and are expected to be recognized as revenue in future periods, and primarily relates to Government Solutions and Parking Solutions customers. As of June 30, 2026 and December 31, 2025, the Company had approximately $
Remaining performance obligations represent the amount of contracted future revenue not yet recognized as the amounts relate to undelivered performance obligations, including both deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods. The Company elected the practical expedients to omit disclosure for the amount of the transaction price allocated to remaining performance obligations with an enforceable contract term of one year or less and the amount that relates to variable consideration allocated to a wholly unsatisfied performance obligation to transfer a distinct good or service within a series of distinct goods or services that form a single performance obligation. As of June 30, 2026, total transaction price allocated to performance obligations in the Government Solutions segment that were unsatisfied or partially unsatisfied was $
Recent Accounting Pronouncements
Accounting Standards Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period at a disaggregated level. The guidance is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard on its financial statements and disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU removes all references to prescriptive and sequential software development stages. The ASU requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project and it is probable that the project will be completed and the software will be used for its intended purpose. The guidance is effective for annual periods beginning after December 15, 2027 and interim periods within fiscal years beginning after December 15, 2027. The guidance can be applied on a prospective basis, a modified basis for in-process projects, or on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard on its financial statements and disclosures.
14
3. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following at:
($ in thousands) |
|
June 30, |
|
|
December 31, |
|
||
Prepaid services |
|
$ |
|
|
$ |
|
||
Prepaid tolls |
|
|
|
|
|
|
||
Income taxes receivable |
|
|
|
|
|
|
||
Short term investments |
|
|
|
|
|
|
||
Deposits |
|
|
|
|
|
|
||
Costs to fulfill a customer contract |
|
|
|
|
|
|
||
Prepaid insurance |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total prepaid expenses and other current assets |
|
$ |
|
|
$ |
|
||
4. Goodwill and Intangible Assets
Second Quarter 2026 Impairment Assessments
During the second quarter of 2026, the Company identified impairment indicators resulting from a sustained decline in its share price, the loss of a significant customer and changes in executive leadership. Accordingly, the Company performed interim impairment assessments of its long-lived assets and goodwill as of May 31, 2026. The Company evaluated the recoverability of its long-lived asset groups before performing its quantitative goodwill impairment tests.
The Company first evaluated the recoverability of its long-lived asset groups by comparing the carrying amount of each asset group with the estimated undiscounted cash flows expected to be generated by the asset group. The estimated undiscounted cash flows of the Parking Solutions asset groups, consisting of customer relationships, trademark and developed technology, were less than its carrying amount. Accordingly, the Company measured the asset group at fair value and recognized a $
After recognizing the long-lived asset impairment and related deferred-tax effects, the Company performed quantitative goodwill impairment tests for each of its reporting units. The estimated fair values of the Commercial Services, Government Solutions North America and Government Solutions International reporting units exceeded their respective carrying amounts, and no goodwill impairment was recognized for those reporting units. The estimated fair value of the Parking Solutions reporting unit was less than its carrying amount. Accordingly, the Company recognized a $
The Company estimated the fair values of its reporting units by equally weighting the results of the income approach and market approach methods, which are based on the present value of future discounted cash flows and market data, respectively, and are classified as Level 3 inputs on the fair value hierarchy. Under the income approach, the Company used a discounted cash flow method based on projected cash flows and terminal values discounted using market-participant weighted-average costs of capital. Significant assumptions included revenue growth rates, EBITDA margins, terminal growth rates and discount rates. Under the market approach, the Company primarily applied EBITDA multiples derived from selected guideline public companies. Significant assumptions included the selection of guideline public companies, projected EBITDA, and the selected valuation multiples. The fair value of the impaired customer relationships was estimated using income-based valuation
15
techniques, including the multi-period excess earnings method, which are Level 3 measurements in the fair value hierarchy. Significant assumptions included projected revenue, customer attrition rates, contributory asset charges and discount rates.
The following table presents the changes in the carrying amount of goodwill by reportable segment:
|
|
Commercial |
|
|
Government |
|
|
Parking |
|
|
|
|
||||
($ in thousands) |
|
Services |
|
|
Solutions |
|
|
Solutions |
|
|
Total |
|
||||
Balance at December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Goodwill impairment |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Foreign currency translation adjustment |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Balance at June 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Intangible assets consist of the following as of the respective period-ends:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Gross |
|
|
|
|
|
Gross |
|
|
|
|
||||
|
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
|
Accumulated |
|
||||
($ in thousands) |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|
Amortization |
|
||||
Trademarks |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Patent |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer relationships |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Developed technology |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross carrying value of intangible assets |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Less: accumulated amortization |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Intangible assets, net |
|
$ |
|
|
|
|
|
$ |
|
|
|
|
||||
Amortization expense was $
Estimated amortization expense in future years is expected to be:
($ in thousands) |
|
|
|
|
Remainder of 2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
16
5. Accrued Liabilities
Accrued liabilities consist of the following at:
($ in thousands) |
|
June 30, |
|
|
December 31, |
|
||
Accrued salaries and wages |
|
$ |
|
|
$ |
|
||
Current portion of operating lease liabilities |
|
|
|
|
|
|
||
Income taxes payable |
|
|
|
|
|
|
||
Accrued interest payable |
|
|
|
|
|
|
||
Advanced deposits |
|
|
|
|
|
|
||
Self-insurance liability |
|
|
|
|
|
|
||
Restricted cash due to customers |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total accrued liabilities |
|
$ |
|
|
$ |
|
||
6. Debt, Net
The following table provides a summary of the Company’s debt, net at:
($ in thousands) |
|
June 30, |
|
|
December 31, |
|
||
Amended Term Loan |
|
$ |
|
|
$ |
|
||
Senior Notes |
|
|
|
|
|
|
||
Other debt(1) |
|
|
|
|
|
|
||
Less: original issue discounts |
|
|
( |
) |
|
|
( |
) |
Less: unamortized deferred financing costs |
|
|
( |
) |
|
|
( |
) |
Total debt, net |
|
|
|
|
|
|
||
Less: current portion of debt |
|
|
( |
) |
|
|
( |
) |
Total debt, net of current portion |
|
$ |
|
|
$ |
|
||
(1)
2021 Term Loan and Amended Term Loan
In March 2021, VM Consolidated, Inc. (“VM Consolidated”), the Company’s wholly owned subsidiary, entered into an Amendment and Restatement Agreement No.1 to the First Lien Term Loan Credit Agreement (the “2021 Term Loan”) with a syndicate of lenders. The 2021 Term Loan had an aggregate borrowing of $
17
In October 2025, VM Consolidated and certain of the Company’s subsidiaries entered into the Amendment and Restatement Agreement No. 2 to the Amended and Restated First Lien Term Loan Credit Agreement dated as of March 26, 2021 (such agreement amended and restated, the “Amended and Restated Term Loan Agreement”), to refinance the existing senior secured term loans in an aggregate outstanding principal amount of approximately $
The Amended Term Loan bears interest at a per annum rate equal to Secured Overnight Financing Rate ("SOFR") plus an applicable margin of
During the six months ended June 30, 2026, the Company made quarterly repayments totaling $
The Company recorded less than $
In addition, the Amended Term Loan requires mandatory prepayments equal to the product of the excess cash flows of the Company (as defined in the Amended and Restated Term Loan Agreement) and the applicable prepayment percentages (calculated as of the last day of the fiscal year), as set forth in the following table:
Consolidated First Lien Net Leverage Ratio (As Defined in the Amended and Restated Term Loan Agreement) |
|
Applicable |
> 3.70:1.00 |
|
|
< 3.70:1.00 and > 3.20:1.00 |
|
|
< 3.20:1.00 |
|
Senior Notes
In March 2021, VM Consolidated issued an aggregate principal amount of $
Interest on the Senior Notes is fixed at
The Revolver
The Company entered into a Revolving Credit Agreement in March 2018 (the “Revolver”) with a commitment of up to $
18
Outstanding borrowings under the Amended Revolver accrue interest at per annum rate equal to SOFR plus a margin ranging from
A commitment fee on the unused portion of the Amended Revolver is payable quarterly at (x) an annual rate of
All borrowings and other extensions of credits under the Amended Term Loan, Senior Notes and the Amended Revolver are subject to the satisfaction of customary conditions and restrictive covenants including absence of defaults and accuracy in material respects of representations and warranties. Substantially all of the Company’s assets are pledged as collateral under the Amended Term Loan and the Amended Revolver. At June 30, 2026, the Company was compliant with all debt covenants in its debt agreements.
From time to time, the Company enters into equipment financing arrangements in the normal course of business, including certain equipment leases and purchases accounted for as financing arrangements. Amounts outstanding under these arrangements are included in "Other debt" in the table above and were not material to the Company’s overall financial position, liquidity, or capital resources as of June 30, 2026.
Interest Expense, Net
The Company recorded interest expense, including amortization of deferred financing costs and discounts, of $
The weighted average effective interest rate on the Company’s outstanding borrowings was
7. Fair Value of Financial Instruments
Accounting Standards Codification Topic 820, Fair Value Measurement, includes a single definition of fair value to be used for financial reporting purposes, provides a framework for applying this definition and for measuring fair value under GAAP, and establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are summarized as follows:
Level 1 – Fair value is based on observable inputs such as quoted prices for identical assets or liabilities in active markets.
Level 2 – Fair value is determined using quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are directly or indirectly observable.
Level 3 – Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow, or similar technique.
19
The carrying amounts reported in the Company’s condensed consolidated balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate fair value due to the immediate to short-term maturity of these financial instruments. The estimated fair value of the Company’s debt, net was calculated based upon available market information.
|
|
Level in |
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||||||
|
|
Fair Value |
|
Carrying |
|
|
Estimated |
|
|
Carrying |
|
|
Estimated |
|
||||||||
($ in thousands) |
|
Hierarchy |
|
Amount |
|
|
Fair Value |
|
|
Amount |
|
|
Fair Value |
|
||||||||
Term Loan |
|
2 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Senior Notes |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other debt(1) |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
||
(1)
As a result of a legal settlement finalized in February 2026, the Company received ordinary shares of a publicly traded company based in Australia. The shares are classified as short-term investments within the prepaid expenses and other current assets line on the condensed consolidated balance sheets and are measured at fair value on a quarterly basis. The fair value of these shares is determined using quoted closing market prices on the Australian Securities Exchange, an active exchange, as of the measurement date. Accordingly, the investment is classified within Level 1 of the fair value hierarchy.
|
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Three Months Ended |
|
|
Six Months Ended |
|
||
($ in thousands) |
|
June 30, 2026 |
|
|
June 30, 2026 |
|
||
Beginning balance |
|
$ |
|
|
$ |
|
||
Equity securities acquired from legal settlement |
|
|
|
|
|
|
||
Change in fair value of equity securities |
|
|
( |
) |
|
|
( |
) |
Ending balance |
|
$ |
|
|
$ |
|
||
The Company has an equity investment measured at cost with a carrying value of $
8. Net (Loss) Income Per Share
Basic net (loss) income per share is calculated by dividing net (loss) income by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net (loss) income per share is calculated by adjusting the weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.
20
The components of basic and diluted net (loss) income per share are as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(In thousands, except per share data) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Denominator: |
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|
||||
Weighted average shares - basic |
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|
||||
Common stock equivalents(1) |
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|
||||
Weighted average shares - diluted |
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|
|
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|
|
|
||||
Net (loss) income per share - basic |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Net (loss) income per share - diluted |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Antidilutive shares excluded from diluted net (loss) income per share: |
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|
||||
Restricted stock units |
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|
||||
Non-qualified stock options |
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|
||||
Performance share units |
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|
||||
Common stock equivalents(1) |
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|
||||
Total antidilutive shares excluded |
|
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|
|
|
|
|
|
|
||||
(1)
9. Income Taxes
The Company’s interim income tax provision is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that period. The estimated annual effective tax rate requires judgment and is dependent upon several factors. The Company provides for income taxes under the liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the tax basis of assets or liabilities and their carrying amounts in the financial statements.
The Company provides a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before the Company is able to realize their benefit. The Company calculates the valuation allowance in accordance with the authoritative guidance relating to income taxes, which requires an assessment of both positive and negative evidence regarding the realizability of these deferred tax assets, when measuring the need for a valuation allowance. Significant judgment is required in determining any valuation allowance against deferred tax assets.
The Company’s effective income tax rate was (
10. Stockholders’ Equity
Share Repurchases and Retirement
In October 2023, the Company’s Board of Directors authorized a share repurchase program for up to an aggregate amount of $
21
consolidated statements of stockholders’ equity. All repurchased shares were subsequently retired. The prior repurchase authorization expired on April 30, 2025.
In May 2025, the Company’s Board of Directors authorized a new share repurchase program for up to an aggregate amount of $
During the six months ended June 30, 2026, the Company paid $
11. Stock-Based Compensation
The following details the components of stock-based compensation for the respective periods:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Operating expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Selling, general and administrative expenses(1) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(1)
12. Tax Receivable Agreement
In October 2018, the Company entered into a Tax Receivable Agreement (“TRA”) with PE Greenlight Holdings, LLC. On August 3, 2022, PE Greenlight Holdings, LLC sold and transferred to Lakeside Smart Holdco L.P (“Lakeside”), all of its rights, remaining interests and obligations as of that date under the TRA. The TRA provides for the payment to Lakeside of
At June 30, 2026, the TRA liability was $
13. Commitments and Contingencies
The Company has issued various letters of credit under contractual arrangements with certain of its domestic and international vendors and customers. Outstanding letters of credit under these arrangements totaled $
The Company is subject to tax audits in the normal course of business and does not have material contingencies recorded related to such audits.
22
The Company accrues for claims and contingencies when losses become probable and reasonably estimable. As of the end of each applicable reporting period, the Company reviews each of its matters and, where it is probable that a liability has been or will be incurred, the Company accrues for all probable and reasonably estimable losses. Where the Company can reasonably estimate a range of loss it may incur regarding such a matter, the Company records an accrual for the amount within the range that constitutes its best estimate. If the Company can reasonably estimate a range but no amount within the range appears to be a better estimate than any other, the Company uses the amount that is the low end of such range.
Legal Proceedings
The Company is subject to legal and regulatory actions that arise from time to time in the ordinary course of business. The Company records a liability when it believes it is probable a loss will be incurred, and the amount of loss or range of loss can be reasonably estimated. The assessment as to whether a loss is probable, reasonably possible or remote, and as to whether a loss or a range of such loss is estimable, often involves significant judgment about future events. When necessary, the Company accrues estimated amounts related to legal proceedings within accrued liabilities on the condensed consolidated balance sheets. The ultimate cost of litigation or settlement could be materially different than the amount of the current estimates and accruals and could have a material adverse impact on the Company’s consolidated financial position, results of operations, or cash flows.
On June 4, 2026, a putative securities class action was filed in the United States District Court for the District of Arizona, captioned Otucu v. Verra Mobility Co., et al., on behalf of a putative class of investors who purchased the Company's common stock between February 24, 2026 and May 26, 2026. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and seeks an unspecified amount of damages on behalf of investors that purchased or otherwise acquired Company common stock between February 24, 2026 and May 26, 2026. The complaint alleges that defendants materially misled the putative class with respect to the Company’s statements regarding contract renewal negotiations with a Commercial Services customer and guidance with respect to full year 2026. The Company intends to defend this matter vigorously. The Company has not recorded any loss or gain contingencies associated with this matter as it is not probable or reasonably estimable at June 30, 2026.
14. Segment Reporting
The Company has
The operating and reportable segments were determined based on how the Company’s Chief Operating Decision Maker (“CODM”) regularly reviews the operating results of the various components of the Company for which discrete financial information is available, including based on the nature of the products and services and the type of customer. The Company defines the CODM as its Chief Executive Officer. The Company’s CODM primarily uses actual revenues and segment profit (defined below) as compared to previously budgeted amounts to evaluate the operating performance, allocate resources, and deploy capital to the segments.
Segment performance is based on revenues and income from operations before depreciation, amortization, and stock-based compensation. The measure also excludes interest expense, net, income taxes and certain other transactions and is inclusive of other income, net. The tables below refer to this measure as segment profit. The aforementioned items are not indicative of operating performance, and, as a result, are not included in the measures that are reviewed by the CODM for the segments. Other income, net included in segment profit below consists primarily of credit card rebates earned on the prepayment of tolling transactions and gains or losses on foreign currency transactions and excludes certain non-operating expenses inapplicable to segments.
The CODM does not use discrete asset information to evaluate operating performance at the segment level, and as such, the Company has not reported assets disaggregated by reportable segment.
23
The following tables set forth financial information by segment for the respective periods:
|
|
For the Three Months Ended June 30, 2026 |
|
|||||||||||||
|
|
Commercial |
|
|
Government |
|
|
Parking |
|
|
|
|
||||
($ in thousands) |
|
Services |
|
|
Solutions |
|
|
Solutions |
|
|
Total |
|
||||
Service revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Product sales |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of service revenue, excluding depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of product sales |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on disposal of assets, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (income) expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Segment profit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill impairment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other reconciling items (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
( |
) |
|||
(1)
|
|
For the Three Months Ended June 30, 2025 |
|
|||||||||||||
|
|
Commercial |
|
|
Government |
|
|
Parking |
|
|
|
|
||||
($ in thousands) |
|
Services |
|
|
Solutions |
|
|
Solutions |
|
|
Total |
|
||||
Service revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Product sales |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of service revenue, excluding depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of product sales |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on disposal of assets, net |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Other income, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Segment profit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other reconciling items (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
24
(1)
|
|
For the Six Months Ended June 30, 2026 |
|
|||||||||||||
|
|
Commercial |
|
|
Government |
|
|
Parking |
|
|
|
|
||||
($ in thousands) |
|
Services |
|
|
Solutions |
|
|
Solutions |
|
|
Total |
|
||||
Service revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Product sales |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of service revenue, excluding depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of product sales |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on disposal of assets, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (income) expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Segment profit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill impairment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other reconciling items (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
( |
) |
|||
(1)
|
|
For the Six Months Ended June 30, 2025 |
|
|||||||||||||
|
|
Commercial |
|
|
Government |
|
|
Parking |
|
|
|
|
||||
($ in thousands) |
|
Services |
|
|
Solutions |
|
|
Solutions |
|
|
Total |
|
||||
Service revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Product sales |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of service revenue, excluding depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of product sales |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on disposal of assets, net |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Other income, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Segment profit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other reconciling items (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
(1)
The Company provides information on credit loss expense by reportable segment, refer to Note 2, Significant Accounting Policies, for additional details.
25
The Company primarily operates within the United States, Australia, United Kingdom, Canada, and in various other countries in Europe and Asia.
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Australia |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
United Kingdom |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
All other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total international revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
15. Subsequent Event
Commercial Services Customer Contracts
On August 1, 2026, the Company entered into an extension agreement with a significant Commercial Services customer which represented over
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our Annual Report, and our financial statements and the related notes included in Part I, Item 1 “Financial Statements” of this Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Please refer to the section in this Report entitled “Cautionary Note Regarding Forward-Looking Statements.”
Overview
We are a leading provider of smart mobility technology solutions, principally operating throughout the United States, Australia, Europe, and Canada. We make transportation safer, smarter, and more connected through our integrated, data-driven solutions, including toll and violations management, title and registration services, automated safety and traffic enforcement, and commercial parking management. We bring together vehicles, hardware, software, data, and people to solve transportation challenges for customers around the world, including commercial fleet owners such as RACs, Direct Fleets, and FMCs, as well as governments, universities, parking operators, healthcare facilities, transportation hubs, and violation-issuing authorities. Our vision is to continue to develop and use technology and data intelligence to make transportation safer, smarter, and more connected globally.
Our Segments
We have three operating and reportable segments: Commercial Services, Government Solutions, and Parking Solutions:
In connection with the executive leadership and organizational realignment described under “Recent Events”, we are evaluating the effect of changes to our organizational structure and internal management reporting on the identification of our operating and reportable segments. We continue to report three operating and reportable segments for the periods presented. Depending on how the organizational and internal management reporting changes affect the financial information regularly reviewed by our chief operating decision maker, the Company's Interim Chief Executive Officer, into assessing performance and allocating resources, the evaluation could result in a change to our segment reporting in a future period, including reporting as a single operating and reportable segment. Any such change would be reflected beginning in the period in which the change becomes effective, with prior-period segment information recast as required.
Segment performance is based on revenues and income from operations before depreciation, amortization, and stock-based compensation. The measure also excludes interest expense, net, income taxes, and certain other transactions and is inclusive of other income, net.
27
Executive Summary
We operate under long-term contracts and a reoccurring service revenue model. We continue to execute our strategy to grow revenue organically year-over-year and focus on initiatives that support our long-term strategy. During the periods presented, we:
Recent Events
Change in Executive Leadership and Organizational Realignment
On June 1, 2026, we announced that David Roberts had departed as our President and Chief Executive Officer and as a member of our Board of Directors. The Board appointed Jon Keyser, previously our Chief Transformation Officer and Executive Vice President and Chief Legal Officer, as Interim President and Chief Executive Officer and retained an executive search firm to assist with a comprehensive search for a permanent successor.
On June 17, 2026, we announced organizational changes intended to accelerate our transformation initiatives, strengthen customer focus and create a more agile and efficient operating model. These changes build upon a hybrid operating model that centralizes key functions, including Human Resources, Finance, Legal, Government Relations, Engineering and Product Management. Stacey Moser was appointed Chief Customer Officer with responsibility for sales, account management and marketing across our Commercial Services and Government Solutions businesses. We are evaluating the effect of these organizational and internal management reporting changes on our operating and reportable segments. See “Our Segments” above for additional information.
Commercial Services Customer Contracts
We announced that one of our three significant Commercial Services customers had issued a notice terminating its contract with us; that customer subsequently withdrew the notice and entered into a seven-year contract extension on terms materially less favorable to us than the prior agreement, including an option for the customer to modulate its fleet volume. A second significant Commercial Services customer entered into a five-year extension, with options to extend, also on materially less favorable terms than the prior agreement and with fleet volume modulation rights. Within the next twelve months, we expect to engage in contractual renewal discussions with a third significant Commercial Services customer.
Fluctuations in fleet volume under these arrangements could cause our revenue, results of operations, and cash flows to vary from period to period and could have a material adverse effect on our business, financial condition, and results of operations. Additionally, any failure to renew the third customer's agreement on favorable terms or at all or any future termination of such contracts could have a material adverse effect on our business, financial condition, and results of operations.
Goodwill and Intangible Impairment
We recorded a $64.0 million impairment to goodwill in our Parking Solutions segment during the six months ended June 30, 2026, which is presented in a separate line item on the condensed consolidated statements of operations. This was in connection with our 2026 assessment of goodwill impairment where the Parking Solutions reporting unit's carrying value exceeded the estimated fair value. As part of this assessment, we determined that the carrying value of certain intangibles within the Parking Solutions segment were not recoverable and recorded a $40.4 million impairment to intangibles in our Parking Solutions segment during the six months ended June 30, 2026, which is presented in a separate line item on the condensed consolidated statements of operations. Refer to Note 4, Goodwill and Intangible Assets, in Part I, Item 1, Financial Statements, for additional information.
Key Factors Affecting Our Results of Operations
We believe that our performance and future success depends on a number of factors that present opportunities for us but also pose risks and challenges, including those discussed below and in Part I, Item 1A. “Risk Factors” of our Annual Report and in Part II, Item 1A. “Risk Factors” of this Report.
28
Macroeconomic Conditions
Our business is susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: the inflationary impact on items such as wages and travel-related costs, future travel demand, legislation or regulation regarding the adoption, expansion, or prohibition of Automatic License Plate Recognition, automated enforcement and traffic safety technology by local, state, or national governments, higher interest rates and the impact of government regulations and actions, including tariffs, trade protection measures, military conflicts or a government shutdown. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, financial condition, and results of operations.
Travel Demand
Our Commercial Services segment is largely impacted by its customer demand which in turn is impacted by a variety of factors including seasonality, demand for business and leisure travel, reductions in the level of air travel, higher airfare costs, increases in energy prices, general international, national, and local economic conditions and cycles, and consumer confidence, as well as other factors affecting travel levels, such as military conflicts, terrorist incidents, natural disasters, epidemic diseases, or a government shutdown.
We monitor the U.S. Transportation and Security Administration (the “TSA”) passenger volume (“TSA Passenger Volume”) as one of several measures for Commercial Services revenue growth. TSA Passenger Volume measures the number of passengers screened by the TSA at United States airports, which correlates to the number of vehicles rented by travelers and toll road usage. TSA Passenger Volume in the second quarter of 2026 was approximately 1% less than TSA Passenger Volume for the same period in 2025.
Electronic Tolling Penetration
Our Commercial Services segment, which offers automated toll and violations management solutions to fleet customers, is impacted by the number of toll roads in the United States and Europe and the geographic concentration of such roads. We monitor the expansion and penetration of toll roadways across the United States and Europe and the percentage of toll roads that rely on cashless or all-electronic infrastructure.
Enabling Legislation
Our Government Solutions segment is positively impacted, in significant part, by enabling legislation that permits photo enforcement programs at the federal, state, and local level in the United States. Accordingly, we depend on national, state, and local governments authorizing the use of automated photo enforcement and not otherwise materially restricting its use.
Primary Components of Our Operating Results
Revenues
Service Revenue. Our Commercial Services segment generates service revenue primarily through the operation and management of tolling programs and processing violations for RACs, FMCs, and other large fleet customers. These solutions are full-service offerings by which we enroll the license plates of our customers’ vehicles and transponders with tolling authority accounts, pay tolls and violations on the customers’ behalf, and, through proprietary technology, integrate with customer data to match the toll or violation to the driver and then bill the driver (or our customer, as applicable) for use of the service. The cost of certain tolls, violations, and our customers’ share of administration fees are netted against revenue. We also generate service revenue in our Commercial Services segment through processing titles and registrations.
Our Government Solutions segment generates service revenue through the operation and maintenance of photo enforcement systems and certain distinct hardware installation and relocation activities. Revenue drivers in this segment include the number of systems installed and the monthly revenue per system. Ancillary service revenue is generated in our Government Solutions segment from payment processing, pass-through fees for collection expense, and other fees.
Our Parking Solutions segment generates service revenue mainly from offering software-as-a-service (“SaaS”), subscription fees, professional services, and citation processing services related to parking management solutions to its customers.
29
Product Sales. Product sales are generated by the sale of photo enforcement equipment and certain highly interdependent and interrelated installation services in the Government Solutions segment and specialized hardware in the Parking Solutions segment. Customer buying patterns vary greatly from period to period related to product sales.
Costs and Expenses
Cost of Service Revenue, Excluding Depreciation and Amortization. Cost of service revenue, excluding depreciation and amortization consists of recurring service costs, certain distinct hardware installation and relocation costs, collection and other third-party costs in our segments.
Cost of Product Sales. Cost of product sales consists of the cost to acquire photo enforcement equipment purchased by Government Solutions customers, costs of certain highly interdependent and interrelated installation services, and costs to develop hardware sold to Parking Solutions customers.
Operating Expenses. Operating expenses primarily include payroll and payroll-related costs (including stock-based compensation), subcontractor costs, payment processing, and other operational costs, including print, postage, and communication costs.
Selling, General and Administrative Expenses. Selling, general and administrative expenses include payroll and payroll-related costs (including stock-based compensation), real estate lease expense, insurance costs, professional services fees, and general corporate expenses.
Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain) loss on disposal of assets, net includes depreciation on property, plant and equipment, and amortization of definite-lived intangible assets. This line item also includes any one-time gains or losses incurred in connection with the disposal of certain assets.
Goodwill Impairment. This relates to impairment loss recognized on goodwill from past acquisitions.
Impairment of Intangible Assets. This relates to impairment loss recognized on intangibles.
Interest Expense, Net. This includes interest expense and amortization of deferred financing costs and discounts and is net of interest income.
Loss on Extinguishment of Debt. Loss on extinguishment of debt consists of the write-off of pre-existing original issue discounts and deferred financing costs associated with debt extinguishment.
Other Income, Net. Other income, net primarily consists of volume rebates earned from total spend on credit card transactions, gains or losses on foreign currency transactions, and other non-operating expenses.
30
Results of Operations
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
The following table sets forth our statements of operations data and expresses each item as a percentage of total revenue for the periods presented as well as the changes between periods. The tables and information provided in this section were derived from exact numbers and may have immaterial rounding differences.
|
|
Three Months Ended June 30, |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
Percentage of Revenue |
|
|
Increase (Decrease) |
|
||||||||||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||
Service revenue |
|
$ |
246,710 |
|
|
$ |
223,477 |
|
|
|
93.6 |
% |
|
|
94.7 |
% |
|
$ |
23,233 |
|
|
|
10.4 |
% |
Product sales |
|
|
16,881 |
|
|
|
12,548 |
|
|
|
6.4 |
% |
|
|
5.3 |
% |
|
|
4,333 |
|
|
|
34.5 |
% |
Total revenue |
|
|
263,591 |
|
|
|
236,025 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
27,566 |
|
|
|
11.7 |
% |
Cost of service revenue, excluding depreciation and amortization |
|
|
14,210 |
|
|
|
4,629 |
|
|
|
5.4 |
% |
|
|
2.0 |
% |
|
|
9,581 |
|
|
|
207.0 |
% |
Cost of product sales |
|
|
14,035 |
|
|
|
8,946 |
|
|
|
5.3 |
% |
|
|
3.8 |
% |
|
|
5,089 |
|
|
|
56.9 |
% |
Operating expenses |
|
|
90,577 |
|
|
|
81,317 |
|
|
|
34.4 |
% |
|
|
34.5 |
% |
|
|
9,260 |
|
|
|
11.4 |
% |
Selling, general and administrative expenses |
|
|
43,990 |
|
|
|
48,466 |
|
|
|
16.7 |
% |
|
|
20.5 |
% |
|
|
(4,476 |
) |
|
|
(9.2 |
)% |
Depreciation, amortization and (gain) loss on disposal of assets, net |
|
|
29,167 |
|
|
|
29,473 |
|
|
|
11.1 |
% |
|
|
12.4 |
% |
|
|
(306 |
) |
|
|
(1.0 |
)% |
Goodwill impairment |
|
|
64,037 |
|
|
|
— |
|
|
|
24.3 |
% |
|
|
0.0 |
% |
|
|
64,037 |
|
|
|
100.0 |
% |
Impairment of intangible assets |
|
|
40,354 |
|
|
|
— |
|
|
|
15.2 |
% |
|
|
0.0 |
% |
|
|
40,354 |
|
|
|
100.0 |
% |
Total costs and expenses |
|
|
296,370 |
|
|
|
172,831 |
|
|
|
112.4 |
% |
|
|
73.2 |
% |
|
|
123,539 |
|
|
|
71.5 |
% |
(Loss) income from operations |
|
|
(32,779 |
) |
|
|
63,194 |
|
|
|
(12.4 |
)% |
|
|
26.8 |
% |
|
|
(95,973 |
) |
|
|
(151.9 |
)% |
Interest expense, net |
|
|
15,486 |
|
|
|
16,572 |
|
|
|
5.9 |
% |
|
|
7.0 |
% |
|
|
(1,086 |
) |
|
|
(6.6 |
)% |
Loss on extinguishment of debt |
|
|
— |
|
|
|
23 |
|
|
|
0.0 |
% |
|
|
0.0 |
% |
|
|
(23 |
) |
|
|
(100.0 |
)% |
Other income, net |
|
|
(6,040 |
) |
|
|
(6,003 |
) |
|
|
(2.3 |
)% |
|
|
(2.5 |
)% |
|
|
(37 |
) |
|
|
0.6 |
% |
Total other expenses |
|
|
9,446 |
|
|
|
10,592 |
|
|
|
3.6 |
% |
|
|
4.5 |
% |
|
|
(1,146 |
) |
|
|
(10.8 |
)% |
(Loss) income before income taxes |
|
|
(42,225 |
) |
|
|
52,602 |
|
|
|
(16.0 |
)% |
|
|
22.3 |
% |
|
|
(94,827 |
) |
|
|
(180.3 |
)% |
Income tax provision |
|
|
5,953 |
|
|
|
14,027 |
|
|
|
2.3 |
% |
|
|
6.0 |
% |
|
|
(8,074 |
) |
|
|
(57.6 |
)% |
Net (loss) income |
|
$ |
(48,178 |
) |
|
$ |
38,575 |
|
|
|
(18.3 |
)% |
|
|
16.3 |
% |
|
$ |
(86,753 |
) |
|
|
(224.9 |
)% |
Service Revenue. Service revenue increased by $23.2 million, or 10.4%, to $246.7 million for the three months ended June 30, 2026 from $223.5 million for the three months ended June 30, 2025, representing 93.6% and 94.7% of total revenue, respectively. The following table depicts service revenue by segment:
|
|
Three Months Ended June 30, |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
Percentage of Revenue |
|
|
Increase (Decrease) |
|
||||||||||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||
Service revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial Services |
|
$ |
115,061 |
|
|
$ |
109,050 |
|
|
|
43.7 |
% |
|
|
46.2 |
% |
|
$ |
6,011 |
|
|
|
5.5 |
% |
Government Solutions |
|
|
115,033 |
|
|
|
97,971 |
|
|
|
43.6 |
% |
|
|
41.5 |
% |
|
|
17,062 |
|
|
|
17.4 |
% |
Parking Solutions |
|
|
16,616 |
|
|
|
16,456 |
|
|
|
6.3 |
% |
|
|
7.0 |
% |
|
|
160 |
|
|
|
1.0 |
% |
Total service revenue |
|
$ |
246,710 |
|
|
$ |
223,477 |
|
|
|
93.6 |
% |
|
|
94.7 |
% |
|
$ |
23,233 |
|
|
|
10.4 |
% |
Commercial Services service revenue increased by $6.0 million, or 5.5%, from $109.1 million for the three months ended June 30, 2025 to $115.1 million for the three months ended June 30, 2026. The increase was primarily due to increased product adoption and tolling activity compared to the prior year which contributed to a $4.1 million growth in RAC tolling revenue, with the remainder primarily driven by higher violations processing compared to the same period in 2025.
31
Government Solutions service revenue increased by $17.1 million, or 17.4%, from $98.0 million for the three months ended June 30, 2025, to $115.0 million for the three months ended June 30, 2026. The increase was primarily driven by a $12.0 million increase in New York City revenues associated with new camera installations, net of pricing changes under the new contract. The remaining $5.1 million in growth is attributable to expansion in bus lane, speed and other services.
Parking Solutions service revenue increased to $16.6 million for the three months ended June 30, 2026, from $16.5 million for the three months ended June 30, 2025. The increased revenue was primarily driven by SaaS product offerings, partially offset by decreases in subscription services and professional services related to parking management solutions.
Product Sales. Product sales were $16.9 million and $12.5 million for the three months ended June 30, 2026 and 2025, respectively. The increase was entirely due to an increase in product sales in the Government Solutions segment. Customer buying patterns vary greatly from period to period related to product sales.
Cost of Service Revenue, Excluding Depreciation and Amortization. Cost of service revenue, excluding depreciation and amortization increased from $4.6 million for the three months ended June 30, 2025 to $14.2 million for the same period in 2026, mainly due to NYCDOT installation service costs and increased recurring service costs.
Cost of Product Sales. Cost of product sales increased by $5.1 million from $8.9 million in the three months ended June 30, 2025 to $14.0 million in the three months ended June 30, 2026, which was due to increased product sales primarily driven by the New York City expansion, partially offset by lower margin on product sales in the second quarter 2026 compared to the second quarter of 2025.
Operating Expenses. Operating expenses increased by $9.3 million, or 11.4%, from $81.3 million for the three months ended June 30, 2025 to $90.6 million for the three months ended June 30, 2026. The increase in 2026 compared to the prior year period was primarily in the Government Solutions segment of approximately $7.7 million driven by increases in subcontractor, information technology, rent and recurring services costs. Operating expenses as a percentage of total revenue decreased from 34.5% to 34.4% for the three months ended June 30, 2025 and 2026, respectively. The following table presents operating expenses by segment:
|
|
Three Months Ended June 30, |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
Percentage of Revenue |
|
|
Increase (Decrease) |
|
||||||||||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial Services |
|
$ |
24,015 |
|
|
$ |
23,501 |
|
|
|
9.1 |
% |
|
|
10.0 |
% |
|
$ |
514 |
|
|
|
2.2 |
% |
Government Solutions |
|
|
60,126 |
|
|
|
52,415 |
|
|
|
22.8 |
% |
|
|
22.2 |
% |
|
|
7,711 |
|
|
|
14.7 |
% |
Parking Solutions |
|
|
4,821 |
|
|
|
3,898 |
|
|
|
1.9 |
% |
|
|
1.7 |
% |
|
|
923 |
|
|
|
23.7 |
% |
Operating expenses by segment |
|
|
88,962 |
|
|
|
79,814 |
|
|
|
33.8 |
% |
|
|
33.9 |
% |
|
|
9,148 |
|
|
|
11.5 |
% |
Other expenses |
|
|
1,615 |
|
|
|
1,503 |
|
|
|
0.6 |
% |
|
|
0.6 |
% |
|
|
112 |
|
|
|
7.5 |
% |
Total operating expenses |
|
$ |
90,577 |
|
|
$ |
81,317 |
|
|
|
34.4 |
% |
|
|
34.5 |
% |
|
$ |
9,260 |
|
|
|
11.4 |
% |
32
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased to $44.0 million for the three months ended June 30, 2026 compared to $48.5 million for the same period in 2025. This was primarily due to a $7.2 million decrease in stock-based compensation and a $1.2 million decrease in credit loss expense partially offset by a $4.1 million increase in expenses related to organization restructuring and executive transition costs compared to the same period in the prior year. Selling, general and administrative expenses as a percentage of total revenue decreased from 20.5% to 16.7% for the three months ended June 30, 2025 and 2026, respectively. The following table presents selling, general and administrative expenses by segment:
|
|
Three Months Ended June 30, |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
Percentage of Revenue |
|
|
Increase (Decrease) |
|
||||||||||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial Services |
|
$ |
18,249 |
|
|
$ |
18,823 |
|
|
|
6.9 |
% |
|
|
8.0 |
% |
|
$ |
(574 |
) |
|
|
(3.0 |
)% |
Government Solutions |
|
|
16,782 |
|
|
|
17,660 |
|
|
|
6.4 |
% |
|
|
7.5 |
% |
|
|
(878 |
) |
|
|
(5.0 |
)% |
Parking Solutions |
|
|
6,059 |
|
|
|
6,500 |
|
|
|
2.3 |
% |
|
|
2.7 |
% |
|
|
(441 |
) |
|
|
(6.8 |
)% |
Selling, general and administrative expenses by segment |
|
|
41,090 |
|
|
|
42,983 |
|
|
|
15.6 |
% |
|
|
18.2 |
% |
|
|
(1,893 |
) |
|
|
(4.4 |
)% |
Other expenses |
|
|
2,900 |
|
|
|
5,483 |
|
|
|
1.1 |
% |
|
|
2.3 |
% |
|
|
(2,583 |
) |
|
|
(47.1 |
)% |
Total selling, general and administrative expenses |
|
$ |
43,990 |
|
|
$ |
48,466 |
|
|
|
16.7 |
% |
|
|
20.5 |
% |
|
$ |
(4,476 |
) |
|
|
(9.2 |
)% |
Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain) loss on disposal of assets, net, decreased slightly by $0.3 million to $29.2 million for the three months ended June 30, 2026 from $29.5 million for the same period in 2025.
Goodwill Impairment. We recorded an impairment loss of $64.0 million for the three months ended June 30, 2026, as a result of the May 2026 assessment of goodwill impairment in our Parking Solutions segment. See Note 4, Goodwill and Intangible Assets, for additional information.
Impairment of Intangible Assets. We recorded an impairment loss of $40.4 million for the three months ended June 30, 2026, as a result of the May 2026 interim impairment assessment of long-lived assets in our Parking Solutions segment. See Note 4, Goodwill and Intangible Assets, for additional information.
Interest Expense, Net. Interest expense, net decreased by approximately $1.1 million from $16.6 million for the three months ended June 30, 2025 to $15.5 million for the same period in 2026. This was primarily attributable to 25 basis-point reduction in the interest rate as a result of refinancing our 2021 Term Loan in October 2025 coupled with decreasing SOFR rates. See “Liquidity and Capital Resources” below.
Loss on Extinguishment of Debt. We recorded less than $0.1 million of loss on extinguishment of debt during the three months ended June 30, 2025 related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayment on the 2021 Term Loan.
Other Income, Net. Other income, net remained flat at $6.0 million for both the three months ended June 30, 2026 and 2025.
Income Tax Provision. Income tax provision was $6.0 million representing an effective tax rate of (14.1)% for the three months ended June 30, 2026 compared to a tax provision of $14.0 million, with an effective tax rate of 26.7% for the same period in 2025. The decrease in effective tax rate variance was primarily driven by the goodwill impairment recorded for the three months ended June 30, 2026, which is not deductible for tax purposes.
Net (Loss) Income. We had net loss of $(48.2) million for the three months ended June 30, 2026, as compared to a net income of $38.6 million for the three months ended June 30, 2025. The $86.8 million decrease was primarily due to impairment on goodwill and intangible assets recorded for the three months ended June 30, 2026 and an increase in operating expenses, partially offset by increased gross margin on product sales and installation services and a decrease in selling, general and administrative expenses and the other statement of operations activity discussed above.
33
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
The following table sets forth our statements of operations data and expresses each item as a percentage of total revenue for the periods presented as well as the changes between periods. The tables and information provided in this section were derived from exact numbers and may have immaterial rounding differences.
|
|
Six Months Ended June 30, |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
Percentage of Revenue |
|
|
Increase (Decrease) |
|
||||||||||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||
Service revenue |
|
$ |
460,102 |
|
|
$ |
435,379 |
|
|
|
94.4 |
% |
|
|
94.8 |
% |
|
$ |
24,723 |
|
|
|
5.7 |
% |
Product sales |
|
|
27,057 |
|
|
|
23,900 |
|
|
|
5.6 |
% |
|
|
5.2 |
% |
|
|
3,157 |
|
|
|
13.2 |
% |
Total revenue |
|
|
487,159 |
|
|
|
459,279 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
27,880 |
|
|
|
6.1 |
% |
Cost of service revenue, excluding depreciation and amortization |
|
|
21,601 |
|
|
|
9,412 |
|
|
|
4.4 |
% |
|
|
2.0 |
% |
|
|
12,189 |
|
|
|
129.5 |
% |
Cost of product sales |
|
|
22,325 |
|
|
|
16,978 |
|
|
|
4.6 |
% |
|
|
3.7 |
% |
|
|
5,347 |
|
|
|
31.5 |
% |
Operating expenses |
|
|
176,520 |
|
|
|
155,056 |
|
|
|
36.2 |
% |
|
|
33.8 |
% |
|
|
21,464 |
|
|
|
13.8 |
% |
Selling, general and administrative expenses |
|
|
84,843 |
|
|
|
99,967 |
|
|
|
17.4 |
% |
|
|
21.8 |
% |
|
|
(15,124 |
) |
|
|
(15.1 |
)% |
Depreciation, amortization and (gain) loss on disposal of assets, net |
|
|
58,458 |
|
|
|
57,287 |
|
|
|
12.0 |
% |
|
|
12.5 |
% |
|
|
1,171 |
|
|
|
2.0 |
% |
Goodwill impairment |
|
|
64,037 |
|
|
|
— |
|
|
|
13.1 |
% |
|
|
0.0 |
% |
|
|
64,037 |
|
|
|
100.0 |
% |
Impairment of intangible assets |
|
|
40,354 |
|
|
|
— |
|
|
|
8.4 |
% |
|
|
0.0 |
% |
|
|
40,354 |
|
|
|
100.0 |
% |
Total costs and expenses |
|
|
468,138 |
|
|
|
338,700 |
|
|
|
96.1 |
% |
|
|
73.8 |
% |
|
|
129,438 |
|
|
|
38.2 |
% |
Income from operations |
|
|
19,021 |
|
|
|
120,579 |
|
|
|
3.9 |
% |
|
|
26.2 |
% |
|
|
(101,558 |
) |
|
|
(84.2 |
)% |
Interest expense, net |
|
|
30,893 |
|
|
|
33,208 |
|
|
|
6.3 |
% |
|
|
7.2 |
% |
|
|
(2,315 |
) |
|
|
(7.0 |
)% |
Loss on extinguishment of debt |
|
|
— |
|
|
|
48 |
|
|
|
0.0 |
% |
|
|
0.0 |
% |
|
|
(48 |
) |
|
|
(100.0 |
)% |
Other income, net |
|
|
(10,134 |
) |
|
|
(10,112 |
) |
|
|
(2.0 |
)% |
|
|
(2.2 |
)% |
|
|
(22 |
) |
|
|
0.2 |
% |
Total other expenses |
|
|
20,759 |
|
|
|
23,144 |
|
|
|
4.3 |
% |
|
|
5.0 |
% |
|
|
(2,385 |
) |
|
|
(10.3 |
)% |
(Loss) income before income taxes |
|
|
(1,738 |
) |
|
|
97,435 |
|
|
|
(0.4 |
)% |
|
|
21.2 |
% |
|
|
(99,173 |
) |
|
|
(101.8 |
)% |
Income tax provision |
|
|
19,696 |
|
|
|
26,521 |
|
|
|
4.0 |
% |
|
|
5.8 |
% |
|
|
(6,825 |
) |
|
|
(25.7 |
)% |
Net (loss) income |
|
$ |
(21,434 |
) |
|
$ |
70,914 |
|
|
|
(4.4 |
)% |
|
|
15.4 |
% |
|
$ |
(92,348 |
) |
|
|
(130.2 |
)% |
Service Revenue. Service revenue increased by $24.7 million, or 5.7%, to $460.1 million for the six months ended June 30, 2026 from $435.4 million for the six months ended June 30, 2025, representing 94.4% and 94.8% of total revenue, respectively. The following table depicts service revenue by segment:
|
|
Six Months Ended June 30, |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
Percentage of Revenue |
|
|
Increase (Decrease) |
|
||||||||||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||
Service revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial Services |
|
$ |
212,868 |
|
|
$ |
210,439 |
|
|
|
43.7 |
% |
|
|
45.8 |
% |
|
$ |
2,429 |
|
|
|
1.2 |
% |
Government Solutions |
|
|
213,123 |
|
|
|
191,953 |
|
|
|
43.7 |
% |
|
|
41.8 |
% |
|
|
21,170 |
|
|
|
11.0 |
% |
Parking Solutions |
|
|
34,111 |
|
|
|
32,987 |
|
|
|
7.0 |
% |
|
|
7.2 |
% |
|
|
1,124 |
|
|
|
3.4 |
% |
Total service revenue |
|
$ |
460,102 |
|
|
$ |
435,379 |
|
|
|
94.4 |
% |
|
|
94.8 |
% |
|
$ |
24,723 |
|
|
|
5.7 |
% |
Commercial Services service revenue increased by $2.4 million, or 1.2%, from $210.4 million for the six months ended June 30, 2025 to $212.9 million for the six months ended June 30, 2026. The increase was primarily due to increased product adoption and tolling activity compared to the prior year which contributed to a $4.6 million growth in RAC tolling revenue, partially offset by lower revenue generated from our FMC customers due to customer churn.
Government Solutions service revenue increased by $21.2 million, or 11.0%, from $192.0 million for the six months ended June 30, 2025, to $213.1 million for the six months ended June 30, 2026. The increase was primarily driven by $12.6 million in revenue from speed, bus lane, school bus, red light and other services. The remaining $8.6 million in growth comes from installation revenue on new camera installations for New York City net of price changes on the new contract.
Parking Solutions service revenue increased to $34.1 million for the six months ended June 30, 2026, from $33.0 million for the six months ended June 30, 2025. The increased revenue was primarily driven by SaaS product offerings and professional services, partially offset by a decrease in subscription services related to parking management solutions.
34
Product Sales. Product sales were $27.1 million and $23.9 million for the six months ended June 30, 2026 and 2025, respectively. Product sales increased by $3.2 million, which was due to a $3.8 million increase in product sales in the Government Solutions segment partially offset by a $0.6 million decrease in product sales in the Parking Solutions segment. Customer buying patterns vary greatly from period to period related to product sales.
Cost of Service Revenue, Excluding Depreciation and Amortization. Cost of service revenue, excluding depreciation and amortization increased from $9.4 million for the six months ended June 30, 2025 to $21.6 million for the same period in 2026, mainly due to NYCDOT installation service costs and increased recurring service costs.
Cost of Product Sales. Cost of product sales increased by $5.3 million from $17.0 million in the six months ended June 30, 2025 to $22.3 million in the six months ended June 30, 2026, which was due to increased product sales compared to the same period in 2025.
Operating Expenses. Operating expenses increased by $21.5 million, or 13.8%, from $155.1 million for the six months ended June 30, 2025 to $176.5 million for the six months ended June 30, 2026. The increase in 2026 compared to the prior year period was primarily in the Government Solutions segment for approximately $17.2 million driven by increases in subcontractor, information technology, rent, recurring services costs and wages, approximately $2.5 million in the Parking Solutions segment driven by wages, information technology and subcontractor costs and approximately $1.3 million in the Commercial Services segment driven by recurring services. Operating expenses as a percentage of total revenue increased from 33.8% to 36.2% for the six months ended June 30, 2025 and 2026, respectively. The following table presents operating expenses by segment:
|
|
Six Months Ended June 30, |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
Percentage of Revenue |
|
|
Increase (Decrease) |
|
||||||||||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial Services |
|
$ |
46,877 |
|
|
$ |
45,579 |
|
|
|
9.6 |
% |
|
|
9.9 |
% |
|
$ |
1,298 |
|
|
|
2.8 |
% |
Government Solutions |
|
|
116,614 |
|
|
|
99,376 |
|
|
|
23.9 |
% |
|
|
21.6 |
% |
|
|
17,238 |
|
|
|
17.3 |
% |
Parking Solutions |
|
|
9,963 |
|
|
|
7,500 |
|
|
|
2.1 |
% |
|
|
1.7 |
% |
|
|
2,463 |
|
|
|
32.8 |
% |
Operating expenses by segment |
|
|
173,454 |
|
|
|
152,455 |
|
|
|
35.6 |
% |
|
|
33.2 |
% |
|
|
20,999 |
|
|
|
13.8 |
% |
Other expenses |
|
|
3,066 |
|
|
|
2,601 |
|
|
|
0.6 |
% |
|
|
0.6 |
% |
|
|
465 |
|
|
|
17.9 |
% |
Total operating expenses |
|
$ |
176,520 |
|
|
$ |
155,056 |
|
|
|
36.2 |
% |
|
|
33.8 |
% |
|
$ |
21,464 |
|
|
|
13.8 |
% |
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased to $84.8 million for the six months ended June 30, 2026 compared to $100.0 million for the same period in 2025. This was primarily due to a $9.2 million decrease related to a legal settlement finalized in February 2026, a $7.1 million decrease in share-based compensation and a $6.6 million decrease in credit loss expense partially offset by an $8.3 million increase in expenses related to organization restructuring and executive transition costs compared to the same period in the prior year. Selling, general and administrative expenses as a percentage of total revenue decreased from 21.8% to 17.4% for the six months ended June 30, 2025 and 2026, respectively. The following table presents selling, general and administrative expenses by segment:
|
|
Six Months Ended June 30, |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
Percentage of Revenue |
|
|
Increase (Decrease) |
|
||||||||||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial Services |
|
$ |
35,372 |
|
|
$ |
38,405 |
|
|
|
7.3 |
% |
|
|
8.4 |
% |
|
$ |
(3,033 |
) |
|
|
(7.9 |
)% |
Government Solutions |
|
|
35,651 |
|
|
|
36,963 |
|
|
|
7.3 |
% |
|
|
8.0 |
% |
|
|
(1,312 |
) |
|
|
(3.5 |
)% |
Parking Solutions |
|
|
11,520 |
|
|
|
13,758 |
|
|
|
2.3 |
% |
|
|
3.0 |
% |
|
|
(2,238 |
) |
|
|
(16.3 |
)% |
Selling, general and administrative expenses by segment |
|
|
82,543 |
|
|
|
89,126 |
|
|
|
16.9 |
% |
|
|
19.4 |
% |
|
|
(6,583 |
) |
|
|
(7.4 |
)% |
Other expenses |
|
|
2,300 |
|
|
|
10,841 |
|
|
|
0.5 |
% |
|
|
2.4 |
% |
|
|
(8,541 |
) |
|
|
(78.8 |
)% |
Total selling, general and administrative expenses |
|
$ |
84,843 |
|
|
$ |
99,967 |
|
|
|
17.4 |
% |
|
|
21.8 |
% |
|
$ |
(15,124 |
) |
|
|
(15.1 |
)% |
35
Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain) loss on disposal of assets, net, increased by $1.2 million to $58.5 million for the six months ended June 30, 2026 from $57.3 million for the same period in 2025. This was primarily due to an increase in depreciation expense related to equipment, vehicles and internally developed software in the 2026 period compared to the 2025 period.
Interest Expense, Net. Interest expense, net decreased by approximately $2.3 million from $33.2 million for the six months ended June 30, 2025 to $30.9 million for the same period in 2026. This was primarily attributable to a 25 basis-point reduction in the interest rate as a result of refinancing our 2021 Term Loan in October 2025 coupled with decreasing SOFR rates. See “Liquidity and Capital Resources” below.
Goodwill Impairment. We recorded an impairment loss of $64.0 million for the six months ended June 30, 2026, as a result of the May 2026 interim impairment assessment of goodwill in our Parking Solutions segment. See Note 4, Goodwill and Intangible Assets, for additional information.
Impairment of Intangible Assets. We recorded an impairment loss of $40.4 million for the six months ended June 30, 2026, as a result of the May 2026 assessment of long-lived assets in our Parking Solutions segment. See Note 4, Goodwill and Intangible Assets, for additional information.
Loss on Extinguishment of Debt. We recorded less than $0.1 million of loss on extinguishment of debt during the six months ended June 30, 2025 related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayment on the 2021 Term Loan.
Other Income, Net. Other income, net remained flat at $10.1 million for both the six months ended June 30, 2026 and 2025.
Income Tax Provision. Income tax provision was $19.7 million representing an effective tax rate of (1,133.5)% for the six months ended June 30, 2026 compared to a tax provision of $26.5 million, with an effective tax rate of 27.2% for the same period in 2025. The decrease in effective tax rate variance was primarily driven by the goodwill impairment recorded for the six months ended June 30, 2026, which is not deductible for tax purposes.
Net (Loss) Income. We had net loss of $(21.4) million for the six months ended June 30, 2026, as compared to a net income of $70.9 million for the six months ended June 30, 2025, primarily driven by the impairment of goodwill and intangible assets.
Liquidity and Capital Resources
Our principal sources of liquidity are cash flows from operations and the available borrowing under our Amended Revolver.
We believe that our existing cash and cash equivalents, cash flows provided by operating activities, and our ability to borrow under our Amended Revolver will be sufficient to meet operating cash requirements, service debt obligations and fund potential share repurchases for at least the next 12 months and thereafter for the foreseeable future. Our ability to generate sufficient cash from our operating activities depends on our future performance, which is subject to general economic, political, financial, competitive and other factors beyond our control. In addition, our future capital expenditures and other cash requirements could be higher than currently expected due to various factors, including any expansion of our business or strategic acquisitions.
We have incurred significant long-term debt as a result of acquisitions completed in prior years. Should we pursue strategic acquisitions, we may need to raise additional capital, which may be in the form of additional long-term debt, borrowings on our Amended Revolver, or equity financings, all of which may not be available to us on favorable terms or at all. We have the ability to borrow under our Amended Revolver to meet expected obligations as they come due.
We originally entered into the Revolver in March 2018 and increased the borrowing capacity thereunder to $125.0 million in May 2025 pursuant to an amendment thereto. In fiscal year 2025, we amended and restated the Revolver and entered into the Amended and Restated Revolving Credit Agreement which increased the existing commitment from $125.0 million to $150.0 million and extended the maturity date to October 17, 2030. As of June 30, 2026, we had no outstanding borrowings and $115.4 million available for borrowing, net of letters of credit, under our Amended Revolver. Our cash on hand was $49.6 million as of June 30, 2026.
In fiscal year 2025, we refinanced the existing senior secured term loans under the 2021 Term Loan in an aggregate outstanding principal amount of approximately $688.8 million with a new senior secured term loan of the same principal amount maturing on October 15, 2032 and reduced the interest rate by 0.25%. We made quarterly repayments totaling $3.4
36
million on our Amended Term Loan during the six months ended June 30, 2026, and as a result, the total principal outstanding on the Amended Term Loan was $683.6 million as of June 30, 2026.
At June 30, 2026, the tax receivable agreement liability was approximately $38.7 million. We expect to make payments of approximately $5.3 million per year for the next seven years and approximately $1.1 million in the final year.
Share Repurchases and Retirement
In October 2023, our Board of Directors authorized a share repurchase program for up to an aggregate amount of $100.0 million of our outstanding shares of Class A Common Stock over an 18-month period. After we repurchased an aggregate 3.5 million shares for approximately $87.3 million in fiscal year 2024, in December 2024, our Board of Directors authorized the repurchase of up to an additional $100.0 million of our outstanding shares under the then-existing program, providing us with approximately $112.7 million available for repurchases. In December 2024, we entered into an ASR agreement with a third-party financial institution and paid $112.7 million to receive an initial delivery of 3,821,958 shares of our Class A Common Stock. The final settlement occurred on March 3, 2025, at which time, we received an additional 685,934 shares of Class A Common Stock calculated using a volume-weighted average price over the term of the ASR agreement. All repurchased shares were subsequently retired. The prior repurchase authorization expired on April 30, 2025.
In May 2025, our Board of Directors authorized a new share repurchase program for up to an aggregate amount of $100.0 million of our outstanding shares of Class A Common Stock over an 18-month period. On October 23, 2025, our Board of Directors authorized the repurchase of up to an additional $150.0 million of our outstanding shares of Class A Common Stock under the existing May 2025 program, providing us with $250.0 million available for repurchases. During the fourth quarter of fiscal year 2025, we paid $133.4 million to repurchase 6,028,853 shares of our Class A Common Stock through open market transactions. All repurchased shares were subsequently retired.
During the six months ended June 30, 2026, we paid $50.2 million to repurchase 2,215,800 shares of our Class A Common Stock through open market transactions, which were subsequently retired. In addition, we recorded approximately $0.5 million within accrued liabilities on the condensed consolidated balance sheets as of June 30, 2026 for direct costs related to the excise tax payable on net share repurchases. During the six months ended June 30, 2026, we made approximately $1.4 million of excise tax payments. As of June 30, 2026, $66.3 million remains available under our authorized share repurchase program.
The following table sets forth certain captions indicated on our statements of cash flows for the respective periods:
|
|
Six Months Ended June 30, |
|
|||||
($ in thousands) |
|
2026 |
|
|
2025 |
|
||
Net cash provided by operating activities |
|
$ |
97,246 |
|
|
$ |
138,113 |
|
Net cash used in investing activities |
|
|
(54,837 |
) |
|
|
(56,019 |
) |
Net cash used in financing activities |
|
|
(57,987 |
) |
|
|
(10,920 |
) |
Cash Flows from Operating Activities
Cash provided by operating activities decreased by $40.9 million from $138.1 million for the six months ended June 30, 2025 to $97.2 million for the six months ended June 30, 2026. Net (loss) income year-over-year decreased by $92.3 million, from $70.9 million in 2025 to $(21.4) million in 2026. The aggregate adjustments to reconcile net (loss) income to net cash provided by operating activities increased $86.7 million mainly due to the impairment on goodwill and intangible assets recorded for the current period and the mark-to-market adjustment on the share-based proceeds, partially offset by share-based proceeds acquired from a legal settlement finalized in February 2026, a decrease in credit loss expense and a decrease in stock-based compensation. The aggregate changes in operating assets and liabilities decreased by $35.3 million in 2026 compared to the prior year primarily due to an increase in the net use of working capital, of which, the majority is attributable to an increase in unbilled receivables and inventory, partially offset by an increase in accounts payable.
Cash Flows from Investing Activities
Cash used in investing activities was $54.8 million and $56.0 million for the six months ended June 30, 2026 and 2025, respectively. The decrease in cash used was primarily driven by a $1.1 million decrease for purchases of installation and service parts and property and equipment mainly for the Government Solutions segment compared to the same period in the prior year.
37
Cash Flows from Financing Activities
Cash used in financing activities was $58.0 million and $10.9 million for the six months ended June 30, 2026 and 2025, respectively. The increased use in cash from financing activities was mainly due to $51.6 million of share repurchases in fiscal year 2026 and no comparable repurchases in the prior year period.
Debt, Net
2021 Term Loan and Amended Term Loan
In March 2021, VM Consolidated, our wholly owned subsidiary, entered into the 2021 Term Loan with a syndicate of lenders. The 2021 Term Loan had an aggregate borrowing of $900.0 million, maturing on March 24, 2028. In connection with the 2021 Term Loan borrowings, we had $4.6 million of offering discount costs and $4.5 million in deferred financing costs, both of which were capitalized and amortized over the life of the 2021 Term Loan. Such offering discount costs and deferred financing costs have subsequently been adjusted as needed as a result of refinancing activity discussed below which prompted re-evaluation of unamortized amounts on a lender-by-lender basis.
In October 2025, VM Consolidated and certain of our subsidiaries entered into the Amendment and Restatement Agreement No. 2 to the Amended and Restated First Lien Term Loan Credit Agreement dated as of March 26, 2021, to refinance the existing senior secured term loans in an aggregate outstanding principal amount of approximately $688.8 million with a new senior secured term loan of the same principal amount maturing on October 15, 2032. The proceeds from the Amended Term Loan were used in their entirety to prepay in full the outstanding principal amount of the existing term loan under the 2021 Term Loan agreement.
The Amended Term Loan bears interest at a per annum rate equal to SOFR plus an applicable margin of 2.00%, or a base rate plus an applicable margin of 1.00%. As of June 30, 2026, the interest rate on the Amended Term Loan was 5.6%. The Amended Term Loan amortizes in equal quarterly installments in aggregate amounts equal to 1.00% of the original principal amount of the Amended Term Loan beginning March 31, 2026, with the balance payable at maturity, is subject to mandatory prepayment provisions upon the occurrence of certain specified events, and is repayable at any time at the borrowers’ election. We evaluated the refinancing transactions on a lender-by-lender basis and accounted accordingly for debt extinguishment and debt modification costs (for the portion of the transactions that did not meet the accounting criteria for debt extinguishment).
During the six months ended June 30, 2026, we made quarterly repayments totaling $3.4 million on the Amended Term Loan. During the six months ended June 30, 2025, we made voluntary prepayments totaling $4.5 million on the 2021 Term Loan. As a result, the total principal outstanding was $683.6 million as of June 30, 2026.
We recorded less than $0.1 million of loss on extinguishment of debt during both the three and six months ended June 30, 2025, related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayments.
In addition, the Amended Term Loan requires mandatory prepayments equal to the product of the excess cash flows of the Company (as defined in the Amended and Restated Term Loan Agreement) and the applicable prepayment percentages (calculated as of the last day of the fiscal year), as set forth in the following table:
Consolidated First Lien Net Leverage Ratio (As Defined in the Amended and Restated Term Loan Agreement) |
|
Applicable |
> 3.70:1.00 |
|
50% |
< 3.70:1.00 and > 3.20:1.00 |
|
25% |
< 3.20:1.00 |
|
0% |
Senior Notes
In March 2021, VM Consolidated issued an aggregate principal amount of $350.0 million in Senior Notes, due on April 15, 2029. In connection with the issuance of the Senior Notes, we incurred $5.7 million in lender and third-party costs, which were capitalized as deferred financing costs and are being amortized over the remaining life of the Senior Notes.
Interest on the Senior Notes is fixed at 5.50% per annum and is payable on April 15 and October 15 of each year. We may redeem all or a portion of the Senior Notes at face value plus accrued and unpaid interest.
38
The Revolver
We entered into a Revolving Credit Agreement in March 2018 with a commitment of up to $75.0 million available for loans and letters of credit. In May 2025, pursuant to an amendment thereto, such commitment was increased to $125.0 million. On October 17, 2025, certain of our direct and indirect wholly owned subsidiaries, including VM Consolidated, entered into the Amended and Restated Revolving Credit Agreement to amend and restate the Revolver. The Amended and Restated Revolving Credit Agreement provides for a $150.0 million senior secured asset-based revolving credit facility with a $35.0 million sublimit for the issuance of letters of credit, and matures on October 17, 2030 (subject to an earlier maturity date in certain circumstances).
Outstanding borrowings under the Amended Revolver accrue interest at per annum rate equal to SOFR plus a margin ranging from 1.25% to 1.75% or a base rate plus a margin ranging from 0.25% to 0.75%, in each case, depending on the quarterly average undrawn availability under the Amended Revolver in the prior quarter. The Amended and Restated Revolving Credit Agreement also provides for the option, subject to receiving additional commitments from lenders and the satisfaction of certain conditions, to increase the loan commitments under the Amended Revolver by up to an amount equal to the greater of (x) $75.0 million and (y) the amount by which the borrowing base exceeds the aggregate commitments at such time. There were no outstanding borrowings on the Amended Revolver as of June 30, 2026 or December 31, 2025. The availability to borrow was $115.4 million at June 30, 2026, calculated as our borrowing base which consists of certain eligible accounts receivable and inventory balances, less any outstanding borrowings and letters of credit up to the maximum commitment available.
A commitment fee on the unused portion of the Amended Revolver is payable quarterly at (x) an annual rate of 0.375%, when quarterly average usage was less than 50% of the loan commitments in the prior quarter or (y) an annual rate of 0.250%, when quarterly average usage of the Amended Revolver was greater than or equal to 50% of the loan commitments in the prior quarter. We are also required to pay participation and fronting fees at 1.38% on $3.7 million of outstanding letters of credit as of June 30, 2026.
All borrowings and other extensions of credits under the Amended Term Loan, Senior Notes and the Amended Revolver are subject to the satisfaction of customary conditions and restrictive covenants including absence of defaults and accuracy in material respects of representations and warranties. Substantially all of the Company’s assets are pledged as collateral under the Amended Term Loan and the Amended Revolver. At June 30, 2026, we were compliant with all debt covenants in our debt agreements.
From time to time, we enter into equipment financing arrangements in the normal course of business, including certain equipment leases and purchases accounted for as financing arrangements. Amounts outstanding under these arrangements are included in “Other debt” in Note 6, Debt, Net, in Part I, Item 1, Financial Statements, and were not material to our overall financial position, liquidity, or capital resources as of June 30, 2026.
Interest Expense, Net
We recorded interest expense, including amortization of deferred financing costs and discounts, of $15.5 million and $16.6 million for the three months ended June 30, 2026 and 2025, respectively, and $30.9 million and $33.2 million for the six months ended June 30, 2026 and 2025, respectively.
Off-Balance Sheet Arrangements
We do not have any material off-balance sheet financing arrangements as of June 30, 2026.
Critical Accounting Policies, Estimates and Judgments
The preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Please refer to our Annual Report for our critical accounting policies, estimates and judgments. We believe that our estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, refer to Note 2, Significant Accounting Policies, in Part I, Item 1, Financial Statements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to interest rate risk due to the variable interest rates on the Amended Term Loan and Amended Revolver described in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.
Interest rate risk represents our exposure to fluctuations in interest rates associated with the variable rate debt represented by the Amended Term Loan, which has an outstanding balance of $683.6 million at June 30, 2026, respectively. As of June 30, 2026, the interest rate on the Amended Term Loan was 5.6%.
Based on the June 30, 2026 balance outstanding, each 1% movement in interest rates will result in an approximately $6.8 million change in annual interest expense.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. Our Interim Chief Executive Officer and Chief Financial Officer, with assistance from other members of management, have evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026. Based upon such evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of such date.
Changes in Internal Control Over Financial Reporting
During the quarter ended June 30, 2026, we completed the multi-phase implementation of a new global enterprise resource planning (“ERP”) system to replace components of our operating and financial systems. The completed implementation resulted in changes to certain of our processes and internal controls, including new applications, interfaces and reports that support our financial reporting. The newly implemented ERP system was used during the quarter ended June 30, 2026, and the new and modified processes and controls were used to prepare our condensed consolidated financial statements for the three and six months ended June 30, 2026 included in this Report.
Except as described above, there have been no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting
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Part II—Other Information
Item 1. Legal Proceedings
We are subject to legal and regulatory actions that arise from time to time in the ordinary course of business, and may be subject to similar or other claims in the future. Legal disputes and other claims and proceedings may relate to, among other things, intellectual property, commercial arrangements, negligence and fiduciary duty claims, vicarious liability based on conduct of individuals or entities outside of our control, including our third-party service providers, antitrust claims, deceptive trade practices, general fraud claims, and employment law claims, including compliance with wage and hour regulations. In addition to more general litigation, at times we have also been a named party in claims made against our customers, including putative class actions challenging the legality and constitutionality of automated photo enforcement and other similar programs of our Government Solutions customers, and consumer fraud claims brought against us and our Commercial Services customers alleging faulty disclosures regarding our services. From time to time, we may also be reviewed or investigated by U.S. federal, state, or local regulators, or regulators in the foreign jurisdictions in which we operate regarding these and other matters, including proper licensing and tax assessments. All litigation is inherently unpredictable and we could incur judgments or enter into settlements or claims in the future that could materially impact our results.
On June 4, 2026, a putative securities class action was filed in the United States District Court for the District of Arizona, captioned Otucu v. Verra Mobility Co., et al., on behalf of a putative class of investors who purchased the Company's common stock between February 24, 2026 and May 26, 2026. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and seeks an unspecified amount of damages on behalf of investors that purchased or otherwise acquired Company common stock between February 24, 2026 and May 26, 2026. The complaint alleges that defendants materially misled the putative class with respect to the Company’s statements regarding contract renewal negotiations with a Commercial Services customer and guidance with respect to full year 2026. The Company intends to defend this matter vigorously. The Company has not recorded any loss or gain contingencies associated with this matter as it is not probable or reasonably estimable at June 30, 2026.
When necessary, we accrue estimated amounts related to legal proceedings within accrued liabilities on the condensed consolidated balance sheets. The information contained in Note 13, Commitments and Contingencies, included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.
Except as otherwise noted above, there have been no material developments in legal proceedings. For previously reported information about legal proceedings refer to Part I, Item 3, “Legal Proceedings,” of our Annual Report on Form 10-K for the year ended December 31, 2025, and Part II, Item 1, in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026.
Item 1A. Risk Factors
Part I, Item 1A. “Risk Factors” in our Annual Report includes a discussion of our risk factors. Other than the risk factors below, there have been no material changes from the risk factors described in our Annual Report. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future SEC filings.
Our Commercial Services and Government Solutions segments have several large customers that account for a significant portion of our revenue, and a reduction in demand, materially less favorable terms or pricing in new or amended agreements as compared to the current agreements, or the loss, even temporarily, of one or more of such customers has and could have in the future a material adverse effect on our business.
Our business experiences varying levels of customer concentration. For example, in our Government Solutions segment, NYCDOT represented approximately 21.8% and 14.7% of our total revenues for the quarters ended June 30, 2026 and 2025, respectively. We entered into a new contract with NYCDOT, effective January 1, 2026, to manage New York City’s automated enforcement camera safety programs for a five-year period. The terms of the new contract are materially different than our prior contract with NYCDOT, including service level agreements, service credits, liquidated damages, cybersecurity, and subcontracting requirements. If we do not successfully perform the contract pursuant to its terms, it could have a material adverse effect on our business, financial condition, and results of operations. We may continue to rely on a small number of customers in our Government Solutions segment to represent a significant portion of our total revenues in any given period. The loss of any of our top Government Solutions customers could have a material adverse effect on our business, financial condition, and results of operations.
We also experience customer concentration in our Commercial Services segment. Three of our Commercial Services customers collectively accounted for 34.3% and 36.9% of our total revenues for the quarters ended June 30, 2026 and 2025, respectively. We face risks associated with the renewal of Commercial Services customer agreements. We announced that one of our three significant Commercial Services customers had issued a notice terminating its contract with us; that customer
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subsequently withdrew the notice and entered into a seven-year contract extension on terms materially less favorable to us than the prior agreement, including an option for the customer to modulate its fleet volume. A second significant Commercial Services customer entered into a five-year extension, with options to extend, also on materially less favorable terms than the prior agreement and with fleet volume modulation rights. Within the next twelve months, we expect to engage in contractual renewal discussions with a third significant Commercial Services customer.
Fluctuations in fleet volume under these arrangements could cause our revenue, results of operations, and cash flows to vary from period to period and could have a material adverse effect on our business, financial condition, and results of operations. Additionally, any failure to renew the third customer's agreement on favorable terms or at all or any future termination of such contracts could have a material adverse effect on our business, financial condition, and results of operations.
We are currently conducting a search for a new permanent CEO and managing our CEO transition with interim leadership. We depend on the services of key executives and any inability to attract and retain key management personnel could have a material adverse effect on our business.
We believe that our future success depends upon the services of our executive management team, who have critical experience and relationships that we rely on to implement our business plan and growth strategy. From time to time, there have been and may be future changes in our executive management team resulting from the hiring or departure of these executives. Following the recent departure of our Chief Executive Officer, we are currently operating under the leadership of an Interim Chief Executive Officer while our board of directors conducts a search for a permanent successor. We cannot predict how long this search process will take, whether it will result in the identification and successful onboarding of a qualified permanent candidate, or whether such a candidate will be selected from inside or outside the Company. Effective succession planning and leadership transitions are complex undertakings, and any delay in appointing a permanent Chief Executive Officer, or any perception by employees, customers, investors, or other stakeholders that our leadership is unstable, could adversely affect our business.
Additionally, as our business grows, we may need to attract and hire additional management personnel. We have employment agreements with some members of senior management that include non-competition provisions; however, we cannot prevent our executives from terminating their employment and may not be able to fully enforce non-competition provisions limiting former executives or key personnel from competing with us following any departure. Moreover, we do not carry “key-man” life insurance on the lives of our executive officers, employees, or advisors. Our ability to retain our key management personnel or to identify and attract additional management personnel or suitable replacements is dependent on a number of factors, including the competitive nature of the employment market and our industry. Any failure to retain key management personnel or to attract additional or suitable replacement personnel has and in the future could cause uncertainty among investors, employees, customers, and others concerning our future direction and performance and could have a material adverse effect on our business, financial condition, and results of operations.
Our goodwill and intangible assets have been subject to impairment and may be subject to further impairment in the future, which could have a material adverse effect on our results of operations, financial condition, or future operating results.
We perform a goodwill and long-lived asset impairment test for each reporting unit annually, or more frequently if indicators for potential impairment exist. Indicators that are considered include significant changes in performance relative to expected operating results, significant negative industry or economic trends, or a significant decline in our stock price, and/or market capitalization for a sustained period of time. In addition, we assess the current and future economic outlook for our reporting units during the fiscal year. While we believe the assumptions used in determining whether there was impairment and the amount of any resulting impairment were reasonable and commensurate with the views of a market participant, changes in key assumptions in the future, including increasing the discount rate, lowering forecasts for revenue and operating margin, customer attrition, or lowering the long-term growth rate, could result in additional charges; similarly, one or more changes in these assumptions in future periods due to changes in circumstances could result in future impairments in one or more reporting units. We recognized a $40.4 million impairment of customer relationship, trademark and developed technology intangible assets during the three and six months ended June 30, 2026 in connection with our assessment that the estimated undiscounted cash flows of the Parking Solutions asset group were less than its carrying amount. We also recorded a $64.0 million impairment to goodwill in our Parking Solutions segment during the three and six months ended June 30, 2026 in connection with our assessment that the Parking Solutions reporting unit’s carrying value exceeded the estimated fair value and we cannot predict if or when additional future goodwill impairments may occur. Any future goodwill impairments could have material adverse effects on our operating income, net assets, or our cost of, or access to, capital, which could harm our business. See Note 4, Goodwill and Intangible Assets, in Part I, Item 1, Financial Statements, for additional information.
We are subject to securities litigation, which is expensive and could adversely impact our business.
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In June 2026, a putative securities class action complaint was filed against us and certain of our officers. The case is pending. See Note 13, Commitments and Contingencies, included in Part I, Item 1, Financial Statements in this Report for more information. Litigation of this type is expensive and could result in substantial cost and divert resources from our business regardless of the outcome of such litigation, which could have an adverse effect on our business, financial condition, results of operations or prospects. Any adverse determination in litigation could also subject us to significant liabilities.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities
We did not have any purchases of our Class A Common Stock during the three months ended June 30, 2026.
Sales of Unregistered Securities
We did not have any sales of unregistered equity securities during the three months ended June 30, 2026.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Insider Trading Arrangements
During the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act)
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Report.
Exhibit Index
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|
Incorporated by Reference |
|
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Exhibit Number |
Description |
Form |
File No. |
Exhibit |
Filing Date |
Filed Herewith |
3.1 |
Second Amended and Restated Certificate of Incorporation of Verra Mobility Corporation. |
8-K |
001-37979 |
3.1 |
October 22, 2018 |
|
3.2 |
Amended and Restated Bylaws of Verra Mobility Corporation. |
8-K |
001-37979 |
3.1 |
November 9, 2023 |
|
10.1 |
Form of Retention Award Notice of Grant of Restricted Stock Units and Award Agreement (Interim President and Chief Executive Officer and Chief Financial Officer) under the Verra Mobility Corporation 2018 Equity Incentive Plan. |
|
|
|
|
X |
10.2 |
Form of Retention Award Notice of Grant of Restricted Stock Units and Award Agreement (Chief Customer Officer) under the Verra Mobility Corporation 2018 Equity Incentive Plan. |
|
|
|
|
X |
10.3 |
Form of Retention Award Notice of Grant of Restricted Stock Units and Award Agreement (U.S. Participants (Non-Executive)) under the Verra Mobility Corporation 2018 Equity Incentive Plan. |
|
|
|
|
X |
10.4 |
Form of Cash Retention Bonus Agreement (Interim President and Chief Executive Officer and Chief Financial Officer). |
|
|
|
|
|
10.5 |
Form of Cash Retention Bonus Agreement (Chief Customer Officer). |
|
|
|
|
X |
10.6 |
Form of Retention Award Notice of Grant of Restricted Stock Units and Award Agreement (Non-U.S. Participants). |
|
|
|
|
X |
31.1 |
Certification of Principal Executive Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
X |
31.2 |
Certification of Principal Financial Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
X |
32.1* |
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
X |
32.2* |
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
X |
101.INS |
Inline XBRL Instance Document (the instance does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
|
|
|
|
X |
101.SCH |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
|
|
|
|
X |
44
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
|
|
X |
* This certification is deemed not filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act. |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
VERRA MOBILITY CORPORATION |
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|
|
|
Date: August 5, 2026 |
By: |
/s/ Craig Conti |
|
|
Craig Conti |
|
|
Chief Financial Officer |
|
|
(Principal Financial Officer) |
|
|
|
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